Friday, January 08, 2010

Temporary Jobs Rise for 5th Month, First Time Since 2005; Largest 5-Month Increase Since 1990

WALL STREET JOURNAL -- Even though the payroll number was worse than expected, the data reflects an improvement in the jobs market. Job losses have been moderating substantially during 2009 as the U.S. economy recovered from its worst recession in decades.

In the fourth quarter of 2009, employment losses averaged 69,000 per month, compared to job losses of 691,000 a month in the first quarter of last year. Employment in construction fell by 53,000 in December, while manufacturing jobs fell by 27,000. Temporary help services added 47,000 jobs in December and health care employment continued to increase, by 22,000.

Two positive signs from today's employment report are: 1) Manufacturing overtime hours for November were revised up to 3.4 hours, the highest level since October 2008, and December overtime remained steady at 3.4 hours. This marks the ninth month in a row that overtime hours have either increased or stayed the same as the previous month. 2) The number of temporary help workers increased by 46,500 to the highest level since January 2009 (see graph above), and temporary workers increased five consecutive months for the first time since 2005.

Update: The 166,400 increase in temporary jobs since August is the largest 5-month increase since at least 1990 (data series may only go back to 1990).Both of those indicators signal a labor market that is slowly recovering, and strongly suggest that the worst is behind us.

9 Comments:

Even though the job losses in December were not only below analyst expectations but dismal, I'm going to present the most favorable employment data I can find today.

We have seen this surge in temp jobs which I portray as economic strength when in fact they demonstrate the unwillingness of employers to rehire. It indicates that employers believe any increases in demand for their products is transitory.

How is it that the economy loses 85,000 jobs in december yet we have over 2 million people filing NEW claims that month?

The answer is that many people apply for unemployment who are ineligible. Many keep trying, hoping someone will make a mistake. The falling number of initial claims doesn't reflect improving labor market conditions. It reflects ineligible people giving up or not trying.

It also reflects more people being ineligible as they take and lose temporary jobs.

Thank God though for the Census otherwise it would be even harder to find good news this year.

No, Virginia, there is no Santa Clause. You cannot put garland, ornaments, lights, and a star on a DISMAL labor market and call it a recovery.

Obata is on to something. There were over 13 million initial claims in the past 26 weeks but only 5 million continued claims. Even if you take into account a two week waiting period for benefits, you still have at least 7 million out of 12 million initial claimants being denied benefits or finding jobs in that time frame.

We know the economy isn't adding jobs yet, so unless employers are churning temps at a furious pace, there are a lot of denied claims. If more than 40% of claims are denied, then the initial unemployment claim numbers lose informative value. A decline in those numbers means only people are getting the message they don't qualify.

Funny, but the Calculated Risk blog describes this report as "mostly weak" with "a couple of exceptions" and "otherwise grim".

We have a record number of people unemployed for more than 26 weeks. Weekly Earnings declined and Weekly Hours were flat. The diffusion index shows job losses are more widespread than earlier in the year. The employment to population ratio is plunging. He provided a caveat to taking joy in the increase in temp workers.

"...government spent a record $14.7 billion on Unemployment Insurance Benefits as of December 30, a 24% jump sequentially from the $11.8 billion in November. Yet the DOL has disclosed a mere 1.7% increase in those to whom insurance benefits are paid: from 9.4 million to just under 9.6 million. To put the $14.7 billion number in perspective, in December the Federal Government paid a total of $14 billion ($700 million less) in Federal Salaries!

And some more perspective: in calendar 2009 the government has paid $140 billion in Unemployment Insurance Benefits. This is yet another economic stimulus that nobody in the administration discusses, yet which undoubtedly has the biggest impact on the economy, as all those millions unemployed can moderate their pain courtesy of a passable weekly check from the government ...

Tax collections nationwide declined by 10.9 percent during the third quarter of 2009, the third consecutive quarter during which tax revenues fell by double-digit percentages, according to the latest report from the Rockefeller Institute of Government.

Combining current data with comparable historical figures from the U.S. Census Bureau, the Institute reported that the first three quarters of 2009 marked the largest decline in state tax collections at least since 1963.

[...]

Overall, 48 states saw tax collections fall during the third quarter of 2009, with 22 states experiencing a double-digit percentage decline. During the previous quarter, 36 states saw a double-digit decline, suggesting some moderation during the most recent quarter.